From Mortgage Professional Australia.
The deal announced yesterday is a vote of confidence in broking and a new frontier for vertical integration
Property search giant realestate.com.au will be entering broking, it was announced yesterday.
Realestate.com.au and NAB are building a realestate.com.au-branded mortgage broking business and will launch later this year. All Choice Home Loan brokers will be invited to join the new business, which will benefit from realestate.com.au’s near 5.9m unique visitors a month.
Tracy Fellows, CEO of owner REA Group, portrayed the move as a vote of confidence in broking: “we’re excited to be partnering with NAB to build a new mortgage broking solution. The way people want to look for and buy property is changing. We want to make it easier for Australians to access the help and experience of a mortgage broker through the digital channels they’re already using to find their new home.”
Asked by MPA, REA Group claimed consumers would have access to a “broad panel of lenders, including NAB home loans and a realestate.com.au branded white label product.” Aggregation support will come from Choice Aggregation Services.
It is unclear what options are available to Choice Home Loans brokers who don’t wish to become part of realestate.com.au Home Loans.
How does Smartline fit in?
Yesterday also saw realestate.com.au acquire an 80.3% controlling stake in Smartline.
This deal was separate to that between NAB and REA Group. Smartline will keep its branding and continue to operate under its current management, who retain a 19.7% share in the business for at least the next three years.
Commenting on the move, REA Group’s Executive Director of Financial Services Andrew Russell noted: “We’re delivering on our promise to simplify property search and financing by offering genuine choice when it comes to finding the right home loan.”
However, at this stage, it is not confirmed whether Smartline brokers will actually get access to leads from realestate.com.au. REA Group could only tell MPA that “we will be working with Smartline to explore how both businesses can leverage each other’s scale and capability for the longer term.”
Vertical integration mk.ii
Given broking has recently experienced not one but two reviews, a major brand name such as realestate.com.au entering broking can be seen as a major vote of confidence.
Just as interesting is the role of NAB. Vertical integration was covered by ASIC’s Review of Mortgage Broker remuneration, Proposal 4 of which recommended clearer disclosure of ownership structures and realestate.com.au has been clear about NAB’s involvement.
ASIC also found that vertical integration through white labelling can raise a lender’s market share. NAB and Advantedge’s share of FAST, Choice and Plan loans was significantly higher than their overall market share (22.3% compared to 13.2%). However, NAB’s share of FAST, Choice and Plan was just 12.7% without Advantedge.
NAB will not own realestate.com.au’s home loan business but may be hoping that providing its white label products could have a similar effect as vertical integration.
Also in question is whether other online property groups – specifically Fairfax-owned Domain.com.au – will now decide to enter broking.
